How Debt Consolidation Affects Your Credit Score

Applying for a consolidation loan causes a hard inquiry (−5 points) and opening a new account temporarily lowers average account age (−5 to −15 points).

However, consolidation typically improves your credit over time by: reducing your credit utilization ratio (if you're consolidating credit card debt), establishing a positive payment history with on-time loan payments, and simplifying payments (reducing the risk of missed payments).

Most people see a net credit score improvement within 6–12 months of consolidation..